One Reason To Drink Coffee in China

How can you show your friends (in China) that you have ascended to your country’s middle class?

Starbucks.

First, some background…

A 2010 BusinessWeek article on the world’s most caffeinated countries cited a connection between an emerging middle class and coffee consumption. With the demand for instant coffee increasing in Turkey, Belarus, and Ukraine, analysts see Starbucks growing there also. Correspondingly, Brazil, Russia, India, and China (BRIC countries), have increased their espresso machine orders.

The list of the most caffeinated countries is topped by Finland (608.2 liters per capita), Norway, and Denmark whereas the U.S., at #16, is ranked lower because we put so much milk in our coffee. Meanwhile, China’s per capita purchases of coffee in 2009 were only .3% of Finland’s.

Now though, Quartz tells us that China’s demand for coffee is accelerating.

Based on a summary of a March 2013 Euromonitor coffee report, the data indicate China’s coffee consumption is rising because of urbanization, higher incomes and consumer sophistication. With Nestlé’s Nescafé dominating China’s coffee sales, still Starbucks has targeted the Chinese market and recently was the subject of a Communist Party news article criticizing the high price of its coffee. In response, one Chinese coffee drinker said, “To show my support, I will go to Starbucks for the entire week next week.”

Thorstein Veblen can tell us why.

In The Theory of the Leisure Class (1889), Thorstein Veblen introduced us to “conspicuous consumption.” Referring to society’s more affluent, he said that buying behavior relates more to displaying power and prestige than need. Perhaps having read Veblen, Starbucks founder and CEO, Howard Schultz, perceives the potential for expansion in China as a “major opportunity” for new growth.

Sources and resources: H/T to Quartz for their update on Chinese coffee consumption. For the industry perspective, Euromonitor and the ICO has some stats on Chinese coffee consumption while Bloomberg, Businessweek, and a China blog have more of the current news. Part of this entry was quoted from econlife.